International rating agency Fitch on April 23 has affirmed Romania’s long-term forex debt rating (IDR) at BBB- with a negative outlook, in line with the expectations, according to Romania-Insider.com.
Fitch analysts cited “uncertainty regarding the implementation of policies to address structural fiscal imbalances over the medium term and the impact from the coronavirus pandemic on Romania’s public finances.”
Fitch’s decision came just days after peer agency S&P surprisingly improved its outlook on Romania’s BBB- rating from negative to stable.
Notably, the scenarios sketched by S&P and Fitch are very similar, and they have at core the public finances, more specifically the fiscal consolidation promised by the new Government formed after last fall’s elections. While S&P notes that the recently instated Government “defused near-term fiscal risks” mainly by rolling back previous costly pension legislation, Fitch sees rather the “weak track record of fiscal consolidation and very high budget rigidities” that constitute “key public finance challenges.”
